Transcript of "Com 459 Hw Blue Ocean Strategy"

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Red Ocean vs. Blue Ocean <ul><li>Ingredients </li></ul><ul><li>An open mind </li></ul><ul><li>Untouched Market (Blue Ocean) </li></ul><ul><li>Risk Takers </li></ul><ul><li>TALENT </li></ul>Description Blue Ocean refers to the meaning of opening up a market that has not been touched upon yet. This technique is heavily influenced by innovation and is aimed at making competition irrelevant. Red Ocean describes the meaning of opening up a market that is just the same as all the rest, therefore engaging in fierce and unnecessary competition. Mark Lalic Com 459 source: Kim, W.C., Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Ma: Harvard Business School Press Align the whole system of a firm’s activities in pursuit of differentiation an low cost. Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost. Break the value to cost trade off. Make the value to cost trade off. Create and capture new demands through innovation and change. Exploit customers or the markets current demands. Competition is irrelevant. Competing and trying desperately to eliminate the competition. Creating a business in an untouched market space. Opening up a business in an already competitive market space. Blue Ocean Red Ocean

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A new Value Curve Companies should eliminate factors that cut into value or cut into profit. Reduce Reduce factors that are too high above the industries standard. Eliminate Examples could be factors that Industries constantly compete on such as constant new product development. Some industry standards that cut into company productivity and can be reduced is customer service standards. Create What type of products or services can be created that is not offered within the industry. For example grocery stores can focus on providing an effective home delivery service. Raise What factors can be raised above the industries standards. Companies should focus on ways they can change the sources of value for buyers. Ingredients A smooth flow of communication throughout the company Willingness to change. The ability to use effective rational and critical thinking. The Four Actions Framework Mark Lalic Com 459 source: Kim, W.C., Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Ma: Harvard Business School Press

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The Four Steps of Visualizing Strategy Visual Exploration Visual Strategy Fair Visual Communication After the visual strategy is realized communicate it effectively and easily to your Mark Lalic Com 459 source: Kim, W.C., Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Ma: Harvard Business School Press Allow all your teams to gather together and share their illustrations of the canvas strategies that they created. Nothing will bring change more than visual realization. Managers should go out into the field and explore the six different fields of creating blue oceans. As how painters never let someone else paint for them, managers should never out source their eyes. Organize a team and draw up your companies value curve using the strategy canvas. Visualizing the changes needed will bring executives to act on it. Visual awakening

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The Three Tiers of Noncustomers Your Market First Tier These customers are always searching for something better. Second Tier Also known as refusing noncustomes they find the offerings of markets Unacceptable or beyond their means. Customers are on the edge ready to jump ship if a better market arrives. An Ocean of untapped demand waiting to be released. Third Tier Farthest away from an Industries existing customers. Their needs are always assumed to belong to other markets. Unlimited potential if needs are met Mark Lalic Com 459 source: Kim, W.C., Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Ma: Harvard Business School Press

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The Buyers Experience Cycle Purchase Price, how long does it take to find ,how secure is it. Delivery How long does it take, how easy is it, is it difficult to unpack. Use Is it easy to use, does It require training, does it deliver far more power than the average product. Supplements Do you need other products, is it costly, how easy is it to obtain. Maintenance How easy is it to upgrade and maintain the product. Is it costly Disposal Does the product create waste items, are there environmental issues, is disposal costly. Mark Lalic Com 459 source: Kim, W.C., Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Ma: Harvard Business School Press

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Price Corridor of The Mass High Level pricing – high degree of legal and resource protection. Difficult to imitate. Mid Level pricing – Some degree of legal and resource protection. Low Level pricing – Low degree of legal and resource protection. Easy to imitate. The Price Corridor of the Mass Description: The table is used to help managers find the right price for an irresistible offer. The irresistible offer may not always be the lowest price. Step 1: Identify the price corridor of the mass. Step 2: Specify a price level within the price corridor. Same Different Form Different Form and function Form Same Function Same Objective Mark Lalic Com 459 source: Kim, W.C., Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Ma: Harvard Business School Press